Neeraj Jain vs. The Union Of INDIA, Ministry Of Finance, Department Of Revenue

Held

The Court held that Section 6(2)(b) of the CGST Act and the CBEC Circular dated 05.10.2018 do not prohibit the issuance of summons under Section 70 for the purpose of inquiry when the primary investigations are against different assessees, even if there is an intermediary. The Court distinguished the present case from those where parallel adjudication proceedings were initiated. It was clarified that Section 70 empowers the proper officer to summon any person for evidence or production of documents in 'any inquiry', which is distinct from the 'proceedings' on the same subject-matter mentioned in Section 6(2)(b) that involve adjudication. The Court found that the investigations by the State Tax Authority in Maharashtra were against M/s. Vedam Enterprises and by the Central Tax Authority in Bihar were against M/s. Arti Plastics, with the petitioner acting as an intermediary. The summons issued to the petitioner were for his appearance as a witness. The Court directed the State Tax Authority in Maharashtra to issue a notice for appearance in December 2023 and the State Tax Authority in Patna to issue a notice in November 2023. It also directed that if documents were requisitioned, the petitioner could produce them before the authority that first requisitions them, and that authority would provide authenticated copies for production before the other authority at the petitioner's expense.

Facts

The petitioner, Neeraj Jain, a resident of West Bengal, challenged summons issued under Section 70 of the Central Goods and Services Tax Act (CGST Act) and the State Goods and Services Tax Act by the Directorate General of GST Intelligence (DGGI) and the Assistant Commissioner of State Tax, respectively. The petitioner argued that simultaneous proceedings by state and central authorities were impermissible, citing Section 6 of the GST Act and a CBEC Circular dated 05.10.2018. The revenue contended that the petitioner was summoned only as a witness in investigations concerning two different entities, M/s. Vedam Enterprises (registered in Maharashtra) and M/s. Arti Plastics (registered in Bihar), which had dealings involving the petitioner as an intermediary. M/s. Vedam Enterprises was found to be a fictitious entity.

Key Issues

1. Whether Section 6(2)(b) of the CGST Act and the CBEC Circular dated 05.10.2018 prohibit simultaneous investigations and issuance of summons by State and Central tax authorities when both have jurisdiction over the subject matter? (Question of law) Petitioner's Contention: The petitioner argued that Section 6(2)(b) of the CGST Act and the CBEC Circular dated 05.10.2018 mandate that if one authority (State or Central) initiates proceedings on the same subject matter, the other authority should refrain from initiating parallel proceedings until the first authority completes its investigation. Reliance was placed on the Gujarat High Court judgment in Ms. Bhawani Textiles Vs. Additional Director General and the Delhi High Court judgment in Indo International Tobacco Ltd. vs. Vivek Prasad. Revenue's Contention: The revenue contended that the summons under Section 70 were not 'proceedings' in the sense contemplated by Section 6(2)(b) and the Circular. They argued that the investigations were against separate entities (M/s. Vedam Enterprises and M/s. Arti Plastics), and the petitioner was summoned only as a witness to facilitate these investigations, not as a subject of the primary investigation. Reliance was placed on the Allahabad High Court judgment in M/S G.K. Trading Company vs. Union of India and Anr.